Saturday, August 30, 2008

Some Details about California's AB32

I refuse to tackle the deep issue of who is "hotter"; Biden or Palin. Joe Biden does have very white teeth. Is he promising such a set for every American? Instead, I'd like to talk about California's climate change mitigation bill (AB32). For those of you who have forgotten your facts, in 2006 the Terminator signed this law pushing California to reduce its greenhouse gas emissions 80% below its 1990 level by 2050. Given expected population and income growth over this time period, this is a pretty macho goal.

This law places California at the front of the big push to make progress on climate change.

An economist might ask;

1. What are the benefits to California of unilaterally pursuing this?
2. What are the costs to California of attempting to reach this goal?

The Air Resources Board is starting to provide some answers;

Details on AB32

When I think about the benefits; most of the benefits will accrue to the rest of the world as we California consumers and tax payers act as Guinea Pigs for everyone else.

Through trial and error, producers will learn how to decarbonize their products and you will have us to thank.

Even if California reduced its ghg emissions to 0, this would make no difference for global greenhouse gas emissions. California is 20% of the USA so if the USA is producing 25% of the world's emissions and if 5% vanished; in the current growing world economy; China and India would pretty quickly offset our production.

Given this arithmetic, the benefit of AB32 is as a commitment device. If learning by doing effects are strong, then producers will become much more cost-effective at producing low carbon products.

Sellers of fridges and dishwashers and water heaters will come out with highly energy efficient models for Californians to buy. California households will quickly ditch their "brown" durables and substitute to cleaner, greener products.

I hope that this happens and at least as of right now I do support AB32. We should all read the details of the Scoping Plan.

Californians should be proud that they will sacrifice for the greater good of the planet. I hope you write me a thankyou note.

Every society needs Guinea Pigs. Environmentalists are willing to volunteeer for this job for free.

Now, how costly is this mission? Here we need some hard headed predictions of how the prices of commodities we buy will be affected by the regulation, we then need some estimates of how directed research and development dollars will flow to energy efficiency and how quickly such investments will yield "green" products.

I am interested in whether there will be a backlash against the powers that AB32 is trying to claim. Right now,

Cities and their suburbs are pretty durable. Will AB32 really change California's urban form? Will Westwood become one big public transit station?

Will we knock down the single family homes in Holmby Hills and build 100 story skyscrapers?